Will the Democrats Claim It's Just a "Wide Stance" Too?

The Democrats' public professions of enmity towards Wall Street remind me of the anti-gay rhetoric of disgraced former Senator Larry “Wide Stance” Craig. In his public life, Senator Craig was very outspoken in his condemnations of homosexuality; in their public life, the Democrats are very outspoken in their condemnations of Wall Street. As we learned after a revealing incident in an airport bathroom, Senator Craig’s public mask and his private face were vastly different. The Democrats are every bit as two-faced as the former Senator, and just like him when they’re out of the public view they’re cruising for under-stall action with the object of their public animosity: Wall Street.

Take Senate Banking Committee Chris Dodd, for example: Earlier this week, on the Senate floor, Dodd railed against Goldman Sachs and Magnetar (the hedge fund hijinks of each firm having been previously discussed in this blog here and here, respectively) culminating with the punchline:

"So the problem is not that these executives got rich without contributing to America. The problem is that these executives got rich betting against America."

Watch his indignation:



"Betting against America" is a pretty strong indictment. The Senator must have been so proud of himself for making it in full public view that he forgot to mention that after the investment banks bet against America they shared their winnings with him. From Goldman Dodd received $273,466, and from the relative upstart Magnetar he accepted at least $6,900. Not too shabby. I can't help but wonder if the Senator and his donors ever sing this Magnetar-inspired song to each other:

Bet Against the American Dream from Alexander Hotz on Vimeo.

And Chris Dodd's not the only one having a closeted love affair with Wall Street--not by a long shot! It's widespread: Kirsten Gillibrand, Barack Obama, Rahm Emanuel, Charles Schumer, Harry Reid, former House Democratic Leader Dick Gephardt is now a Goldman Sachs lobbyist, our Congresswoman Mary Jo Kilroy has accepted $52,736 from the Securities and Investment industry--and that doesn't even include the Magnetar money laundered to her by Rahm Emanuel--the list goes on and on and on. So many Democrats, so hot for Wall Street cash, but also, so very ashamed to admit their hearts' desire.

Can you imagine the scenes?

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A flustered and slightly sweaty Rahm Emanuel popping out of a coat closet after an afternoon quickie cell-phone call to Magnetar Capital CEO Alec Litowitz.

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Senator Chris Dodd getting his war chest stuffed in the back of a Citigroup executive's limousine.

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Senate Majority Leader Harry Reid sitting on a bench in a secluded section of a public park smiling coyly at a cute jogger in a Goldman Sachs t-shirt.

"Oh yes! He winked at me! More cash for Harry!" he congratulates himself after the encounter.

--

Congresswoman Mary Jo Kilroy buttoning up her purse with a freshly cut check from Goldman Sachs Managing Director David P. Solomon inside as she leaves his New York office.

"But Mary Jo, what if your constituents find out?" the breathless banker asks.

Emphatically the Congresswoman replies, "They won't!" And then, unleashing even more of her passion for Wall Street cash, "They could never understand OUR LOVE!"

--

Of course those were dramatizations. In reality, the Democrats surely have a far more sophisticated and organized method of setting up Wall Street bankers with the politicians who love them than the ol' Larry Craig tap-and-whistle. The major difference as I see it, is that Senator Craig is deserving of pity for the tortured life he surely had. The Democrats, however, deserve only contempt for their deception. In stepping out on us to dally with Wall Street bankers the Democrats are inflicting great harm on our country and our future. We should help them come out of the closet by kicking them out of the Congress.

Fish Swim, Birds Fly, & Mary Jo Raises Taxes

Congresswoman Mary Jo Kilroy's campaign manager either announced an abrupt shift in Ms. Kilroy's politics this past Thursday or decided Kilroy's policies are so unpalatable to voters that he needed to mask them with a lie. Her campaign manager stated that the Congresswoman is opposed to the idea of a value-added tax and that she has developed an interest "in finding ways to cut taxes and get money back into the hands of the people who need it."

If this were more than election year rhetoric, it'd be shocking. Of course, it's not. Mary Jo Kilroy will always be a pro-tax, anti-growth politician. Throughout her life as a politician Ms. Kilroy has consistently raised taxes. It's what she does. Fish swim, birds fly, and Mary Jo Kilroy raises taxes. Sure as death and... taxes.

As a county commissioner Mary Jo Kilroy voted along party lines to double the sales tax. Five months later, after the county auditor had said the county was collecting more than enough in fees and taxes, Mary Jo Kilroy again voted along party lines to double the conveyance fee for all real estate sales in the county. To make matters worse, Kilroy's abuses of power as county commissioner cost taxpayers hundreds of thousands of dollars.

All told Mary Jo Kilroy raised taxes by more than $200,000,000 as a county commissioner. Apparently, by "get money back into the hands of the people who need it" her campaign manager meant the hands of an ever-expanding government.

Sadly, the $200,000,000 mountain of tax hikes Mary Jo Kilroy buried us under as a county commissioner looks like a molehill compared to the tax hikes she has approved as a congresswoman--and she's just getting started!

Congresswoman Kilroy voted FOR a tax hike with the Waxman-Markey cap-and-trade bill, declared by the Wall Street Journal as likely to be "the biggest tax in American history". Estimates have the costs reaching as high as $161,000,000,000 in 2020--that's $1,870 vacuumed right out of a family of four's grocery budget. Even liberal Democratic "Dean of the House" Rep. John Dingell cautioned that the bill Congresswoman Kilroy supported is "a great big" tax.

Congresswoman Kilroy voted FOR a tax hike with Obamacare, the healthcare overhaul which will cost nearly $1 trillion over the next ten years and will raise taxes by $569.2 billion. Additionally, it will hit an estimated 4 million households with further tax penalties for failing to afford insurance (the law mandates all citizens must purchase insurance). 

And it gets worse: A primary objective of the healthcare overhaul was to rein in costs. Despite Mary Jo Kilroy's Joe Isuzu logic that Obamacare could achieve that feat, a new report from the Centers for Medicare and Medicaid Services Chief Actuary states the legislation will increase national healthcare spending by $311 billion. 

Job well done, Congresswoman. Thanks to Mary Jo Kilroy we all will have the pleasure of paying more for healthcare. What would we do without her?

For one, we'd pay a whole lot less in taxes. Between the $200,000,000 in tax hikes she brought us as county commissioner and the hundreds of billions she's brought us as a Member of Congress, Mary Jo Kilroy could easily fill a money bin and swim through it a la Scrooge McDuck. The difference, of course, is that when Scrooge McDuck does it he entertains children; when Mary Jo Kilroy does it she's saddling them with a deeper share of the national debt--$41,626 per citizen as of this posting.

 Kilroy making it rain--with your tax dollars!

If this is what it looks like when Congresswoman Kilroy is "finding ways to cut taxes and get money back into the hands of the people who need it," God help us when she's out of election-year mode.

In an Awkward Turn of Events: Kilroy Exposes Geithner

On Tuesday revelations on the depth of Treasury Secretary Timothy Geithner's complicity in disguising the instability of collapsed investment services titan Lehman Brothers were exposed in a hearing held by the House Financial Services Committee. The hearing had been called for by Congresswoman Mary Jo Kilroy as part of the Ohio Democratic Party's strategy to place blame for Lehman Brothers's collapse on Republican gubernatorial candidate and former Columbus-based Lehman Brothers employee John Kasich. Just as his name was not mentioned in the bankruptcy examiner's report released last month, Mr. Kasich's name was not mentioned in the testimonies delivered before the committee. It would seem that living and working 500 miles away from Lehman Brothers headquarters, Mr. Kasich truly was out of the loop on the questionable accounting practices.

From Congresswoman Kilroy's perspective the hearing may have been a total failure as it neglected to prove once and for all that John Kasich single-handedly--and with malice in his black heart--caused the global financial crisis. However, the hearing provided a great public service by exposing the systemic organizational failures of the Federal Reserve Bank of New York (FRBNY) as it existed under the leadership of then-President Timothy Geithner. For once some good has come out of Mary Jo Kilroy's addiction to the lowest brand of negative, deceptive politics.

In his testimony, William K. Black, a distinguished bank regulator and professor of economics and law, found President Geithner and his FRBNY team "knew that Lehman was engaged in fraud" and that Geithner's failure to take commensurate action constituted "an egregious violation of the public trust." According to Black, "The FRBNY, led by President Geithner, had a clear statutory mission -- promote the safety and soundness of the banking system and compliance with the law -- stood by while Lehman deceived the public through a scheme that FRBNY officials likened to a “three card monte routine.” Black went on, "the regulatory perpetrators [Geithner and his team] must be held accountable."

How awkward for Mary Jo! She was looking to smear John Kasich and she ended up exposing Obama's Treasury Secretary as asleep at the wheel. I sure hope this isn't going to cause a rift that would stop White House Chief of Staff Rahm Emanuel from channeling more of his dirty housing market collapse money to her!

Not what she had planned

(Photo available at http://www.c-spanvideo.org/marykilroy#)

Anton Valukas, the Lehman Brothers bankruptcy examiner, describes in his report how the FRBNY administered three consecutively less rigorous stress tests to evaluate Lehman's ability to withstand a run or a potential run on the bank. After Lehman failed all three tests, the FRBNY allowed Lehman to design its own fourth stress test which the firm then passed. Valukas concluded, "It does not appear that any agency required any action of Lehman in response to the results of the stress testing."

So, apparently, now-Treasury Secretary of the United States Timothy Geithner's mantra is "If at first you don't succeed, keep lowering the bar until you do."

How confidence inspiring.

I'll bet Mary Jo Kilroy, Nancy Pelosi, and the rest of the congressional chupacabra crew wish the American people would adopt that mantra too--it's the only way their job-killing, deficit-deepening policies could ever get a passing grade.

Obama: Looking Tough, Staying Cozy

On Friday the Securities and Exchange Commission filed a civil suit against the investment bank Goldman Sachs for creating and selling a financial instrument secretly designed to capitalize on the collapse of the housing market. According to the SEC complaint, prominent hedge fund manager John Paulson paid Goldman Sachs to structure the instrument in question, known as Abacus 2007-AC1, to fail. Mr. Paulson subsequently earned an estimated $3.7 billion in 2007 by correctly betting on the failure of Abacus and the collapse of the housing market.

The Abacus deal may remind some of you of the Magnetar trade discussed in the April 14 posting of this blog in that they are, essentially, the same: hedge fund managers composed of equal parts savvy and sleaze with a penchant for donating to Democratic politicians shorted the market for massive personal gain and widespread loss to run-of-the-mill investors.

Yes, you read correctly: Just like Magnetar CEO Alec Litowitz who bankrolled White House Chief of Staff Rahm Emanuel, John Paulson is a heavy Democratic donor. Mr. Paulson generously shared tens of thousands of dollars of his housing market collapse money with seven cash-needy Democratic United States Senators: Minority Leader Harry Reid ($2,300), Banking, Housing, and Urban Affairs Committee Chairman Christopher Dodd ($4,800), Finance Committee Chair Max Baucus ($4,600), Senator Carl Levin ($4,600), Senator Dick Durbin ($4,600), Senator Arlen Specter ($4,600), and Senator Frank Lautenberg ($4,600). And for good measure he also gave a walloping $30,400 of housing collapse money to the Democratic Senatorial Campaign Committee.

Given the Democrats’ tired refrain that Republicans are the “party of Wall Street” one might expect to be surprised to find that so many hedge fund moguls are Democratic donors. The fact of the matter is that the Democrats receive 62% of the securities and investment industry’s campaign contributions to the Republicans’ 37%. In the presidential election Barack Obama raised $14,891,735 from the securities and investment industry compared to John McCain’s $8,698,635. The Democrats are shrieking that the Republicans are too well fed by Wall Street, but compared to the Democrats the Republicans are eating off the dollar menu.

Goldman Sachs, the bank charged with defrauding investors over the Abacus deal and the Democrats’ No. 1 business donor in the 2008 election, gave seventy-five percent of its political donations to the Democrats. That’s 3-1 in favor of the Democrats! What overwhelming ratio do the Democrats need to reach before they will freely admit to the plainly obvious fact that they are betrothed to Wall Street?

Oh how their hearts must ache that their love can never see the light of day! The Democrats and their Wall Street backers must keep their love closeted, for President Obama has been losing his grasp on the false narrative that he and his party are working hard to protect the ordinary Americans injured by the economic meltdown.

The Democrats will use the SEC complaint against Goldman Sachs as a springboard for them to “get tough” (read as “look tough”) on Wall Street. What’s coming is a new era of derivatives regulation. This should happen. Derivatives, heretofore widely unregulated, played a critical role in creating the global financial crisis. It’s asinine that with bipartisan support, a supermajority, and the years-old knowledge that derivatives were a major cause of the financial train wreck that the Democrats have waited this long to act—but hey, they haven’t wanted to bite the hand that feeds!

The mainstream media will be unable to resist the desire to credit President Obama and his Democrats for getting “tough” by dragging the derivatives market into the daylight of public trading. He’ll surely have a grand signing ceremony, senators will give big speeches, and they’ll posture as though they’ve ended Wall Street shenanigans forever.

But this will all be done with a wink and a nod to Wall Street. Because both the Democrats and Wall Street know what’s coming: grand new opportunities for Wall Street elites to win big off of the little guys and a rushing new river of campaign donations for the Democrats.

Wall Street will be upset about the loss of their black box derivatives playground, to be sure. However, any despondence they feel will be tapered by an exhilarating new financial boon on their horizon—the coming of cap-and-trade! (Barack Obama is far too skillful of a politician to slap one of his biggest donors in the face without apologizing profusely by offering up a deeply valuable gift.)

Under a cap-and-trade system, the government issues permits which grant companies the right to emit a certain amount of greenhouse gases. Companies that emit more than permitted then must either buy allowances from other companies that have emitted less than their granted limit or purchase carbon offsets, investments in a project that cuts greenhouse gas emissions someplace else (such as a developing country).

As one can infer from the “trade” part of cap-and-trade, there would be a lot of allowances changing hands. And guess where all that allowance trading would be going down. That’s right: Wall Street.

The passage of a climate change bill such as the one soon to be unveiled in the U.S. Senate, which is said to retain the cap-and-trade structure of a bill that cleared the House of Representatives last June, would create a $2 trillion commodities market—“the largest commodity market ever” according to the U.S. Commodity Futures Trading Commission.

Before its demise Enron executives salivated that cap-and-trade “would do more to promote Enron's business than almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States.” Wall Street bankers also know how much the Obama-approved policy would enrich their bottom line. That’s why they have been employing over one hundred climate change lobbyists to influence their friends in government to create a cap-and-trade system.

Cap-and-trade is a win-win for Obama and Wall Street, but it’ll be a major loss for you and me. The carbon allowances businesses would be required to purchase are nothing more than a tax by another name and that tax will be passed on to us as consumers. Furthermore, the offset provisions encourage businesses to move their operations—and jobs—overseas to countries with laxer emission standards.

So Wall Street gets a $2 trillion market, the Democrats get rewarded by Wall Street campaign donations, and we get increased costs and job destruction. When Barack Obama said he was going to “spread the wealth around” I didn’t realize he meant like that!

This November, let’s cap the Democrats’ political careers and trade them for legislators who will be on our side—not their banker’s.

Mary Jo & Rahm's Dirty Money

Congresswoman Mary Jo Kilroy’s ultra-negative 2008 campaign centered around the same tired refrain that Lt. Colonel Steve Stivers, then also a state senator, had, in the past, worked for a bank. The implication was that Stivers had personally wrought the global financial crisis—and from Columbus, Ohio no less. Former banking lobbyist Steve Stivers was one evil dude, Ms. Kilroy would have us believe. We were to pay no heed to his solid legislative record in the Ohio Senate and his military service overseas. With an awkward smile, Mary Jo Kilroy assured us he was a very bad man—and that she was a very nice lady, by the way.

Now, Governor Ted Strickland’s re-election campaign is centered on similar assertions that John Kasich, as a former Columbus-based employee of Lehman Brothers, is also single-handedly responsible for the global financial crisis. It seems if you’re a Republican and at some point in your life you worked at a bank you personally brought on the global financial crisis—at least by Democrat logic. But keep in mind these people believe spending hundreds of billions of dollars we don’t have will lower the deficit.

With the Democrats’ deeply earnest desire to root out the parties responsible for the global financial crisis I am shocked—SHOCKED!—that they have yet to draw attention to White House Chief of Staff Rahm Emanuel, former managing director of the investment bank Wasserstein Perella and the House of Representatives’s No.1 recipient of campaign contributions from hedge funds.

Beyond being a former investment banker and a recipient of massive amounts of campaign contributions from his friends in the business Mr. Emanuel was the chosen Congressional errand boy of Alec Litowitz, CEO of Magnetar Capital. You’ve probably never heard of Magnetar Capital so let me introduce you: according to financial author Yves Smith, Magnetar Capital is “the single market player most responsible for the severity of the 2008 financial crisis.” (For an overview of how Magnetar contributed to the financial crisis please view: The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going.)

Basically, Magnetar made billions of dollars shorting the market. As his company was contributing to the financial crisis, Mr. Litowitz and his wife, who had never before made significant political contributions, contributed massive amounts of money to Rahm Emanuel (“Friends of Rahm Emanuel”), Rahm Emanuel’s political action committee (Our Shared Values Pac), and the Democratic Congressional Campaign Committee (chaired by Rahm Emanuel). And during that time period Mr. Litowitz and his wife contributed only to Rahm Emanuel and Rahm Emanuel-connected political organizations. Curious.

So a portion of the money made by the misbehavers in the global financial crisis ended up in Rahm Emanuel’s campaign coffers. He’s a Chicago Democrat so that’s hardly shocking. Where’d the money go from there? Surely not to the incorruptible anti-banking crusader Mary Jo Kilroy!

Yep, that’s where it went.

In her 2006 congressional campaign, Mary Jo Kilroy accepted $10,000 from Rahm Emanuel’s Our Common Values PAC and $2,000 from the Friends of Rahm Emanuel.

In her 2008 congressional campaign, Mary Jo Kilroy accepted $10,000 from Rahm Emanuel’s Our Common Values PAC and $4,000 from the Friends of Rahm Emanuel.

And in her 2010 re-election campaign, Mary Jo Kilroy has already accepted $2,000 from the Friends of Rahm Emanuel.

So the money flow chart looks something like this:

People screwed in the financial crisis --> Magnetar/Alec Litowitz --> Rahm Emanuel --> Mary Jo Kilroy

It seems that Congresswoman Kilroy’s moral high ground on all things banking never existed. Don’t worry; I’m sure that won’t stop her from churning out more of those “former banking lobbyist Steve Stivers” campaign ads that kept us all entertained during the 2008 election. And when you’re watching them remember where she got the money to pay for them: out of the pockets of the people who got screwed in the financial crisis.

The President Has Poor Posture

It’s all fine and good if President Obama wants to have a beer and wax philosophical with his friends about how the world would be a better place without nuclear weapons. The topic would even make for a nice speech at a Miss America pageant. The reality, however, is that nuclear weapons do exist. They’ve been invented—the Pandora’s Box is opened! We can’t uninvent them. They’re here, they’re nuclear, get used to it.

American nuclear policy should reflect reality. Unfortunately, last week President Obama reversed our country’s longstanding nuclear policy which had effectively secured peace for sixty-five years.

The previous policy, supported by every president since Harry Truman, was designed to give potential aggressors pause before attacking the United States or one of our allies. Mess with us, and anything may happen—you might even get nuked. A case study in the effectiveness of this policy is illustrated by former Secretary of State James Baker in his memoir, The Politics of Diplomacy. Baker wrote that in a meeting with Iraqi Foreign Minister Tariq Aziz on the eve of the Gulf War he “purposely left the impression that the use of chemical or biological agents by Iraq could invite tactical nuclear retaliation.” No chemical weapons were confirmed to have been used during the war.

Under the new Obama policy, we’ve lost the “calculated ambiguity” that Secretary Baker credits with preventing the use of chemical weapons in the Gulf War. We’ve put all of our cards on the table. The policy states: “the United States will not use or threaten to use nuclear weapons against non-nuclear weapons states that are party to the [Nuclear Non-Proliferation Treaty] and in compliance with their nuclear non-proliferation obligations.” So if anyone who’s treaty-compliant and not openly nuclear wants to gas any of our major cities, the official U.S. stance is “That’s okay.” We’ll still respond to be sure, but it’ll be a slower, more tepid, limited response of conventional bombs and bullets. Obama’s new policy sucks the “super” out of “superpower.”

Ohio Congressman Mike Turner, senior Republican on the House Armed Services Subcommittee on Strategic Forces, has it exactly right:

When it comes to defending the United States against a devastating attack, our message should be clear and simple: If our nation is attacked, we will use all means necessary to defend ourselves. Period. This is the essence of nuclear deterrence: The message should be that the cost of attacking the United States will be greater than the benefit.

Obama’s slumped nuclear posture not only gambles with our safety in the present, it gambles with our nation’s safety in the future as well. Under the new policy, the United States “will not develop new warheads or add military capabilities.” So as China and Russia advance we’ll be staying back in the past. We’ll be fighting with the equivalent of spears and stones as the rest of the world advances. God forbid another war breaks out; we’ll have to change our national anthem to “Livin’ on a Prayer.”

Foreign relations are unpredictable. During World War II, the Russians were our allies. Shortly thereafter we were facing off against them in the Cold War. We don’t know what tomorrow will bring. There’s no crystal ball to gaze into to know what dangers we may face. We do know, however, that it’s best to be prepared. In his first annual message to Congress (the “State of the Union” by today’s terms), George Washington advised, “To be prepared for war is one of the most effectual means of preserving peace.” Peace through strength. The first forty-three presidents understood that.

Barack Obama promised us change. He’s definitely delivering.